After the election the Conservative leadership expected the economy to recover, so that by now the Chancellor would be able to start planning a package of pre-election giveaways designed to woo voters and smash his Labour opponents. It hasn’t worked out like that. The UK is back in recession and the original plan to eliminate the deficit by 2015 through a mixture of spending cuts and tax rises is off course. Labour has developed a strong headline polling lead, but the party’s leadership is still not trusted on the economy. It is so closely associated with the Blair-Brown government, which drove the country onto the rocks by declaring boom and bust over and sponsoring a credit-fuelled public and private spending spree. However, if memories fade and the Coalition becomes irretrievably associated with incompetence, the danger for the Tories is that any residual advantage evaporates.

Aren’t there signs of life in the economy?

Yes, some analysts say that the official figures proclaiming a recession do not tally with positive developments on exports and employment. The Government got some encouraging news last week. Unemployment fell by 65,000 to 2.58 million, and inflation slowed to 2.4 per cent in June. Yet ministers couldn’t really make too much of these statistics. The employment picture is improving in most respects, but the figures also showed a substantial rise in the numbers of long-term unemployed and those who describe themselves as self-employed while they look for full-time work. The Government also knows that the latest GDP figures come out this week. If the key indicator that tells us whether the economy has grown, flatlined or shrunk in the second quarter of this year is negative then the UK will have officially been in recession for the last three quarters.

What are the implications of continued recession?

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If the GDP number is worse than feared, say as bad as minus 0.5 per cent, it will drown out any recent better news and make life extremely difficult for the Government. Labour will try to make more headway with its argument that it is spending cuts (actually quite limited in scope) that are to blame. And in the autumn, disgruntled Conservative MPs and peers who want David Cameron to be bolder on the economy are bound to speak up loudly, putting the Tory leader under increased pressure.

Could the Coalition be more radical on the economy?

Yes, undoubtedly it could. It was essential to start reducing the deficit, to reassure the markets, which over-extended modern governments rely on to fund themselves. But cuts on their own were never going to be enough to restore the UK to health. A more relentless concentration on so-called supply-side measures, freeing up the labour market and making it easier for companies to expand, is desperately needed. Bold tax reform and properly targeted tax cuts to encourage growth are essential too. Having failed to administer the necessary medicine when they came to power, Mr Cameron and George Osborne are now confronted by an economy which needs emergency surgery.

Why doesn’t the Government get on with it?

The constraints of coalition make it too difficult, say the Prime Minister’s supporters. The Lib Dems have gone along with deficit reduction, but they balk at some of the more ambitious economic reforms suggested by frustrated Conservatives. There is also the question of Mr Osborne’s role. The former Chancellor Lord Lawson is the latest to say that Mr Osborne should concentrate on his day job, rather than splitting his time between the Treasury and being the government’s main strategist in No 10. All in all, it is an odd way for a government to deal with an economic crisis.

Why is David Cameron so downbeat?

The Prime Minister’s response to recent developments has been particularly strange. He said last week that the economic picture is much more bleak than he anticipated. He warned that the age of austerity will last until at least 2020. Some pessimism is justified, of course. The eurozone is getting ready for a possible blow-up, with the crisis roaring back in Spain and France, under its new Left-wing President, next on the blocks for an economic emergency. But Mr Cameron is overdoing the misery. It took Britain six years to help win the Second World War; now the Prime Minister is suggesting that it will take longer than that, eight years, for the country to dig itself out of its current hole. A leader who wants to win power in his own right at the next election should surely be looking for a way to blend realism about the UK’s immediate plight with a more optimistic pitch on the country’s prospects.